Understanding how you have a healthy relationship with your finances is a lifetime journey for most people. As you learn the skills and habits that are essential for smart money management your lifestyle, circumstances, goals, and the economy will be constantly evolving, sometimes out of your control. As the threat of a global recession looms here are a few ways to practice smart money moves so that what you can control is working for you.
Evaluate Your Existing Budget
Your monthly budget is one of the biggest tools you have at your disposal. Making sure that you know where all your money is going is the only way to know where you need to cut back and where you can afford to take a few risks. Recurring monthly expenses are oftentimes considered unchangeable items, and people tend to just move them from month to month with the same total costs. However, you might be surprised to learn that things like insurance costs, subscription memberships, and even student loans are all reoccurring monthly costs that can, to a certain extent, be negotiated and reduced.
To free up money in your budget consider refinancing your student loans. This is typically a significant amount of debt within any household and the less you can pay on interest, the better. Shopping for personalized rates in one place online is such a time saver, so don’t assume that if you don’t have student loans, this doesn’t apply to you. You can use the same practice for home and auto insurance as well as personal loans in an effort to protect your finances month to month.
Reduce High-Interest Debt
Reducing your high-interest debt is a great way to take some of the heat off your finances when the economy is uncertain. Many find that using the snowball method helps them get out of debt in a reasonable amount of time and via a manageable process indicative of a clear plan and objective. The more money you are spending on the interest, the more cash-strapped you will feel but that doesn’t necessarily mean that you are eliminating debt.
Prioritize Your Emergency Fund
When the global economy takes a hit, anything can happen. Job loss is more common than ever in many of today’s markets and prioritizing your emergency fund is one of the best insurances you can give yourself so that if something unexpected happens, you won’t be totally crippled by it. Using your budget determines how much money you need to meet your financial obligations for at least three months without any income. This is a common target amount but keep in mind that you can never really have too much saved for an emergency.
Save on Everyday Expenses
Places you spend money frequently are great opportunities to cut costs even though you might think the opposite. Learning how to save on groceries or fuel are two common examples. Signing up for fuel perks that increase with every purchase and using coupons at the supermarket might seem insignificant but over time the level of savings these practices can earn you is far from it.
